Crude Slides After Inventory Report

Crude stocks rise by 4.4 million barrels, while gasoline stocks rise by 200,000.

Oil prices slid Wednesday as traders rendered a bearish verdict on a government report showing higher crude inventories and a fall in distillate stocks.

Crude stocks rose by 4.4 million barrels last week, the Energy Department said, while gasoline inventories rose by 200,000 barrels and distillate stocks fell by 1.6 million barrels. Analysts had expected a 2 million-barrel rise in crude, a 1.5 million-barrel rise in gasoline and a 1.3 million-barrel fall in distillates.

"I view the report as mixed," said Bill O'Grady, assistant director of market analysis at A.G. Edwards. "It's a little bearish for crude and distillates and a little bullish for gasoline. We did see refinery rates up at 1.6%. That's a little slower than I expected. I think most analysts were looking for about 2.2%."

December crude closed at $60.66, down $1.78 on the session. The contract rose by more than $2 a barrel on Tuesday. Meanwhile, unleaded gasoline fell 6.93 cents to $1.58 a gallon, while natural gas dropped about 29.8 cents to $14.04 per million British thermal units.

"Most of yesterday's move was reversed," James Williams, energy economist at WTRG Economics. "Inventories aren't in bad shape. We're back to over 80% of refinery utilization and the rest will probably be back to normal operating levels in two to three weeks. All of these are generally bearish for the petroleum market."

Storm-battered refineries in the Gulf of Mexico continue to come back on line. The U.S. Minerals Management Service said Wednesday's shut-in oil production was about 1 million barrels of oil per day, the equivalent of 68.2% of the gulf's daily oil production. The shut-in gas production was 5.563 billion cubic feet per day, the equivalent to 55.6% of the gulf's daily gas production.